What should a buyer look for before choosing an agent to represent them?

What should a buyer look for before choosing an agent to represent them?

1. Ability to help a buyer evaluate homes
2. Skill in negotiation
3. Undivided Loyalty
4. Proof of savings and past client satisfaction.

An Exclusive Buyer Agent covers the negative aspects of a home as well as the positive - in a consultative role - versus a "sales" role. We give them the pros and cons of a property rather than trying to sell them one. I might show my buyer a number of homes in a given day - and it might be that I would not recommend any one of them (or unless the price came down to an acceptable level - as price fixes everything at some point.)

A couple of people who were referred to us - said that a past client (or past clients) - told them that we had told them when "not to buy a property" and that is what they were looking for.

An Exclusive Buyer Agent buyer agent is focused on:

1. Finding the best home for the buyer
2. Helping the buyer buy it at the best possible value (frequently aligning their compensation with the buyer's interests vs. adverse to their interests as is typical - ie - an agent representing the buyer getting paid more when the buyer's price goes up.)

3. Helping the buyer save money on a loan (shopping lenders) - vs. referring them to an "in-house" lender.


An Exclusive Buyer Agent's role is to consult and counsel and protect a buyer.

They typically have:

1. A higher level of experience serving buyers and better negotiation skills.

2. They also have unwavering/undivided loyalty to buyers - never having any "dual agency" conflicts of interest.

Questions to Ask Any Agent Before You Hire Them

Maryland thinks about Reducing re-set time to 60 days from 180 days for listed property. In Illinois - it is 91 days

In most states - the MLS calculates the number of days a property has spent on the market as a consecutive figure. That amount resets to zero if the property is taken off the market for a certain amount of time. Maryland had it at 180 days - but is thinking about reducing it to as little as 60. Here is an article about the re-set time in Maryland.

In Illinois - for many years - a property had to be off the market for 181 days before being re-listed if the market time was to show zero in the MLS. Then in 2004 - that figure changed to 91 days - and it has been 91 days ever since (re-ratified in November, 20007) with the exception of the summer of 2006 - when the board changed a rule - which only lasted a few months. See the attached for the reason they dissolved it.

At that time - if a property was de-listed and then came back
on the market - it would show zero days on the market - even if it had only been
off the market for a day or two. MLS rules states that if a property is re-listed - it had to have a new listing agreement.

What happened in the summer of 2006 - was that there were so many "new listings" with no new listing agreements - MLSNI had to fine the agents a few hundred dollars - but nevertheless - the statistic in the MLS still zero'ed out. There were so many agents doing this -- re-listing property without new listing agreements - that it became a big headache for MLSNI - and they could not keep up with all the infractions. Here is the postcard that they sent out at that time after they re-thought everything.

So - in September of 2006 - they re-instituted the 91 day rule again. Agents and brokerages put pressure on MLS systems to minimize the number of days a property is off the market - to reset the clock to zero. In some states where total market time (including time with past agents) isn't listed on the agent copy of the MLS sheet (it is in Illinois) -- this can help sellers (if agents are lazy and don't look up the property history).

This Realty Times Article Highlights Information That is Valuable to Home Buyers

This Realty Times Article Highlights Information That is Valuable to Home Buyers
Including a link to The National Association of Exclusive Buyer Agents

It talks about the disadvantages of "one stop shopping" (as I also mention in my my recent blog post) -- how agency disclosure is at very low levels, how the public really doesn't know the difference between a so-called buyer agent (who may list property 95% of their time - but only calling themselves a buyer agent when they are working with a buyer) - and an Exclusive Buyer Agent.

In fact - many traditional Real Estate agents haven't even heard of an Exclusive Buyer Agent - and have no clue what they are...

Check out the link - it's good reading....

Joint Venture Agreements Between Brokerages and Wells Fargo

Recently - the founder of Long & Foster, the Washington DC area's largest residential real estate brokerage, urged his thousands of agents to recommend the company's in-house mortgage lender more often - and stop working with outside lenders such as Bank of America.

In an e-mail to all Long & Foster agents and managers, Wesley Foster Jr. chastised his workers for funding mortgages through other lenders - instead of using Long & Foster's affiliate, "Prosperity Mortgage."


The e-mail sparked criticism, with some Long & Foster agents, consumer activists and others raising concerns about whether Long & Foster is trying to profit at the expense of their clients' interests.

Foster said he wrote the memo to make agents understand that each time they use Prosperity, they're helping Long & Foster.

HUD/RESPA rules state it is illegal "if the agents or office managers receive kickbacks or fees for doing nothing more than referring services."

However - this is not the first such joint venture revenue or profit sharing agreement that I have heard of between Wells Fargo and a brokerage - so apparently - such corporate agreements give a loophole - so that such revenue or profit sharing is legal.

RESPA may want to tighten up on their rules a bit...

This is another piece of evidence that many Real Estate companies pressure their home-buying customers to use an in-house lender or lender that is co-located at the company's office.

Stephen Brobeck, executive director of the Consumer Federation of Americas stated: "It will not serve the interests of their customer and may even erode the credibility of their agents."

One Long & Foster agent said that they found the e-mail "troubling" because it implies that agents should strive to make the company more prosperous, even if it means undermining a client's interests.

I noted previously in a blog post - that a large local Real Estate brokerage here in Chicago has penned the same type of joint venture agreement with the same company - Wells Fargo. So - Wells Fargo appears to be penning such agreements with major Real Estate companies across the USA - to help pad the brokerage's bottom line - in exchange for their agents pushing business to Wells Fargo.

Is sending your clients to a specific lender such as Wells Fargo - looking out for their best interests in a fidicuary manner?

A fidicuary means that you are looking out for someone's best interests. If you are looking out for their financial best interests - wouldn't you help them shop for the best loan rates and fees - and not steer them towards a lender because it will make your broker's company more profitable?

The brokerage company's financial interests are being placed ahead of the client's interests. That is not being a true fiduciary. The Wells Fargo loan may or may not be the best for the client. How would you know unless you compared? You wouldn't!

Real estate firms promote these arrangements as one-stop shopping - telling their buyer client "it is convenient" "just use Joe here in our office" (who either pays the office rent or their company has one of these joint venture agreements with the brokerage - which exploits a loophole in existing RESPA rules - to put money in the brokerage's pocket.

I wonder how many brokerages have retaliated against agents who didn't make referrals to the in-house or joint venture lender?

Do agents get an extra year end spiff - which isn't formally tied to the in-house referrals - but still based on the number of in-house referrals? I don't know.... I'm just asking the question...

Newsweek Article - Find An Exclusive Buyer Agent if Possible - When Purchasing Real Estate

There's a new article in Newsweek about the advantages of using an Exclusive Buyer Agent - as opposed to a "Buyer Agent." Now - if you are in the Chicago Illinois area - there is one near you -- Relocation Advisors Group - an Exclusive Buyer Brokerage

The article references - "If there isn't one in your neighborhood, you can use a selling agent as a buyer agent, but do some screening." I'd have to agree with that... If you can't find an Exclusive Buyer Agent - the next best thing is a so-called Buyer Agent - preferably one with the ABR designation.

But you need to ask them what percentage of their time they spend with buyers versus trying to obtain and market listings. Obviously - the agents who spend more of their time with buyers are the better bet.

In contrast - Exclusive Buyer Agents are specialists - spending 100% of their time serving home buyers - so they are very good at what they do. The analogy is - if you need heart surgery - do you want a general practitioner or a specialist? A purchase of your home is just as important (well almost!)

The problem with buyer agents is their home showing biases (perhaps showing more of their own company's listings or "selling" higher co-op payout properties), and that they can get into dual-agency conflict of interest situations where they may be representing the seller equally with you - which is really non-representation. They may also be reluctant to show for-sale-by-owner (FSBO) properties to you.

An Exclusive Buyer Agent can never get into those types of situations - and many of them actually align their compensation to be in your best interests - instead of the other way around. They show you all FSBO properties meeting your criteria.

The article states, "What about the fear that listing agents won't want to work with you if they know they have to split a commission with your buyer agent?"

In Illinois - every listing in the MLS has a certain payout (called the co-op - which doesn't mean that the agent with the buyer has to "cooperate" (as in give in) to the listing agent) - to someone who brings a buyer - so that is a non-issue.

Also - the payout is not necessarily a split of the total listing agent commission to the seller. Say the listing agent negotiated a 5.5% commission with the seller. The co-op may be 2.5% and the listing agent and their broker would then be keeping 3% (split between them based on whatever split the agent is on.) The seller can choose the payout to be whatever they want - and in fact - negotiate with a listing agent - to pay out more to someone bringing the buyer - than their listing agent - which may be beneficial in the current "buyers market."

Why? Some agents may "sell" the higher payout property to their buyer client - especially if the client isn't under contract with them. When the buyer has no contract with their agent - their agent can pocket the entire co-op payout.

The public thinks that the listing commission is "split" with the buy-side - which is not necessarily the case.

If you contract for a specific rate with your Exclusive Buyer Agent or Buyer Agent in writing - you are reimbursed for what you contract for - by the co-op payout. If the co-op payout is higher than your contract rate - you - the buyer - pocket the difference.

When you contract for a rate - there are no home showing biases - because your agent isn't going to push a higher commission property on you. They have no reason to - because you know your agent will get paid the fixed rate that you contracted for.

If the co-op is less than your fixed rate - your agent can negotiate to have the seller pay the difference - so you are nothing out of pocket to your Exclusive Buyer agent or Buyer Agent. Everything is always built into the price anyway - including the listing agent's cut. Agent's commissions are usually built into the purchase price.

Just as an Exclusive Buyer Agent or Buyer Agent does not dictate to the listing agent what they are going to get paid - neither should the listing agent dictate to the agent bringing the buyer - what they are to be paid. So - the "co-op" payout is really just a proposed payout by the seller / listing firm. The agent representing the buyer - may be worth more or less than that - so by having their buyer decide what they are worth - in writing - the co-op payout may or may not be acceptable to the buyer. If not - they can ask for closing cost credits as part of the negotiation.

HUD considers buyer broker fees to be an allowable closing cost.

We have found that buyers enjoy performance-based compensation for agents - in addition to just a flat fee. But very few agents structure their compensation to be performance based. In fact - a traditional buyer agent usually makes more when their buyer's price goes up. We believe that the opposite makes more sense. So do our clients.

If you want to learn more -- call an Exclusive Buyer Agent in your area.

Evidence That Traditional Agents Can Have Home Showing Biases

Some people don’t believe me when I tell them that “buyer agents” at traditional firms tend to push their own listings over others…due to perhaps getting in-house spiffs…. Remember - as a home buyer, when you hire an Exclusive Buyer Agent to represent you - that agent and their company never list property for sale - and so there is no biased home showing or dual agency conflicts of interest situations.

This is evidence….

“Besides camaraderie, @properties uses other techniques to encourage sales, including rewarding the two brokers who sell the most properties listed in-house with overseas trips. One quarter last year, the winners went to Italy. Another time, to Paris. And any broker who sells $10 million worth of real estate, in any type of transaction, is offered the choice of a Rolex or a Cartier watch.”

Obviously – when an agent pushes their in-house listings or worse yet - their own listings - the buyer experiences biased home showings - and can experience dual agency conflicts of interest with the buyer being equally represented with the seller. The buyer doesn't have someone fully on their side in that case – and doesn't have all the information available to get a good buy on a property that they would have had - had their agent not declared "dual agency" on them.

CNN Money article about the benefits of using an Exclusive Buyer Agent

A new article on CNN Money talks about how people should use an Exclusive Buyer Agent.... Unfortunately - the terminology they used was "buyer agent" in this article at CNN Money

But the point is clear... use an agent that is on your side - and the only type of agent that you can be assured of that does that - is an agent that doesn't list properties - so they can give you unbiased home showing, no conflicts of interest, and always be on your side 100% of the time.

I think most people get confused - as there are so many terminologies in Real Estate that they don't understand... An agent that works at a company that lists property for sale calls themselves a "buyer agent" - that is what most people think they are getting - someone that will always be on their side 100% of the time.

It is too bad for the consumer - that that isn't the case. These agents can get into what is called "dual agency" situations where they are representing you and the seller equally. Unfortunately - there is only a 20% upfront disclosure rate by "buyer agents" about how they can get into such conflict of interest situations - even though the law says that they should always disclose that they could get into that - with the potential client (upon first meeting.)

Without "named differention" the consumer can get confused. Hmmm - buyer agent - sounds like they will be representing my interests 100% of the time...

That is what is so nice about the use of the term "Exclusive Buyer Agent" - because officially - it means that the agent and their company don't list property for sale - and so they can never get into a conflict of interest situation.

In any case - though they blew that terminology in the article -- that is what it is talking about...

And even more unfortunately - many traditional agents sometimes use the word "Exclusive Buyer Agent" - when they aren't - which confuses the public even more.
What is what? What kind of representation is someone giving me? What name can I trust? What does the name mean? etc.

Kiplinger's Personal Finance - Recommends Using an Exclusive Buyer Agent

Kiplinger's Personal Finance - Recommends Using an Exclusive Buyer Agent in this March, 2007 article. (They have written many along the same lines in previous years..) Consumer Reports, Money Magazine, CNN Money, the Wall Street Journal, Medical Economics Magazine, the Consumer Federation of America, and many others have all done the same..

An Exclusive Buyer Agent is an agent that never lists company for sale - nor does their company. They never represent sellers - ever. On the other hand a "buyer's agent" works for a company that lists property for sale - and they themselves usually list property for sale. Whether they are practicing designated agency or dual agency - those are not good things for the buyer...

I like the fact that the article points out that "Agents are paid a cut of the selling price, so the higher the price, the better for them -- but not for their clients." As Exclusive Buyer Agents - we ensure that "the higher the price - the worse for us" - which puts us in alignment with out buyer client's interests.

The definition of insanity is hiring someone with financial interests that are in opposition with yours. When you purchase a used car - the used car saleman's interests are just that.

Like a dog - we "work hard for our scraps" - and we believe that everyone does in this world... So when consumers hire a so-called buyer agent that makes more when their price goes up - they are really doing themselves a dis-service....

When I bought a home when coming in for a position at Motorola in the 90's - the "company referred agent" (read relo company) I had - kept trying to work me over to come up in price - and it really teed me off. She was acting like she was representing the seller and not me. She also referred an awful home inspector - who glossed over many things that should have been found. Many agents refer inspectors that "won't blow the deal" which is really a disservice to the buyer.

I realized then that home buyers needed much better protection than what they were getting - which is why I started this company.... to provide the best possible protection and representation to home buyers... I feel great about what I do for a living - becuase it has the most integrity to buyers in the Real Estate industry....

What is an "As Is" Sale?

With more foreclosure and as-is property coming on the market everyday - it is important for consumers / clients to know what "as is" really means. It means that the seller must disclose all known defects - but that they aren't expecting to pay for any repairs. (However - never rule out that you can STILL negotiate to get credits from a home inspection -- it never hurts to ask. And if there is "no reimbursement" and that would be a deal killer for the buyer - just have them walk away from the transaction.)

With "as is" - the seller isn't making any warranty or representation about the condition of the property.

As-is listings have their positives and negatives for a seller. The negatives are - many buyers wonder "what is hidden... what aren't they telling me about?" -- and they get cold feet. Some sellers do indeed thing that they can get away with selling a home which has a hidden defect that the buyer or a professional inspector won't discover.

They also may sell "as is" because....

They don't have the money to repair the disclosed defects.

They may not have lived in the property (perhaps it was an investment property) and they aren't aware of it's problems.

The seller doesn't want the inconvenience and hassle of making repairs.

Buyers can protect themselves when purchasing as-is properties by hiring a very very good home inspector - that is at a minimum ASHI and/or NAHI certified. You might want to review sample reports from various inspectors - to compare the differences. A good agent will refer you to an agressive inspector -- not one who sugar coats things - so as to not "blow the deal" for the agent.

Though a home warrantee can be helpful - they won't cover pre-existing conditions.

Hawthorn Woods Aquatic Center to Open in June

Enhancing the value of Real Estate in Hawthorn Woods Illinois - the Hawthorn Woods new swimming pool off Midlothian Road is scheduled to open in June!

The Hawthorn Woods Aquatic Center, funded wholly by developer donations, will feature a six-lane, 25-yard competition pool, and a separate diving well having a one and three-meter diving board.

There will be a zero-depth pool with two water slides and various spray features, a separate zero-depth spray area, picnic areas and a bathhouse with a concession stand.

The bathhouse will have a community room which will be available for community groups, private parties and homeowners' associations.

The center will be open seven days a week for open swim, swim lessons, lap swim and swim team practice. The schedule of facility operations, along with sign-up and fees for swim lessons, will be available as the grand opening draws nearer.

Season passes are available for purchase at Village Hall, 2 Lagoon Drive. Applications are also available online at www.vhw.org

Lake County Illinois Real Estate, Golf Courses in Hawthorn Woods, and Lake County Illinois Forest Preserve Golf Courses

If you are thinking about purchasing a home in Lake County Illinois that is near a lot of golf courses - Hawthorn Woods is the place. While
Hawthorn Woods Country Club is in Hawthorn Woods - you can zoom in to see the huge number of golf courses surrounding Hawthorn Woods!

Kemper Lakes Golf Club in Kildeer, Steeple Chase Golf Club (Mundelein Park District), Countryside Golf Club (Mundelein), Ivanhoe Golf Club (Mundelein), Four Winds Golf Club (Mundelein), and Royal Melbourne Country Club in Long Grove - surround Hawthorn Woods.

Would you like a luxury home with a magnificent pond surrounding it - with white swans and herons - and a real USGA spec golf green in the backyard, with sand traps and water hazards for practicing? E-mail me - and I'll fill you in.

The Lake County Forest Preserve district has four different courses that you can golf on.

For more information on Lake County Forest Preserve Golf Courses - check out the following links:

Lake County Forest Preserve Information

Countryside Golf Club

Thunderhawk Golf Club

Brae Loch Golf Club

Ft Sheridan Golf Club

How Real Estate Firms and State Associations are Confusing the General Public

If your are a potential home buyer - please be aware that agents and their companies are prostituting the term "Exclusive" - by sometimes calling themselves an "Exclusive Buyer Agent" or having you enter into an "Exclusive Buyer Agreement"

The official definition from NAR back in the 1990s is that an Exclusive Buyer Agent never lists property for sale - nor does their company - to avoid the conflicts of interest that typical "buyer agents" have. The term "Exclusive" is critical - because the meaning is just that --- exclusively representing buyers.

A traditional buyer agent - can offer you no more than Exclusive Right to Represent Agreement (which means that they are the only agent that is representing you) - which is a far cry from an "Exclusive Buyer Agency Agreement" which means that you are working with an agent that is representing you, but that they and their office never represent sellers. BIG DIFFERENCE.

When they dilute the meaning of the term "Exclusive", and confuse the general public - no one can understand the difference in the type of representation that is offered.

In fact - under an Exclusive Right to Represent Agreement-- that agent may only be temporarily "designated" to represent you. If you become interested in one of their own listings- they suddenly don't represent you anymore -- either declare dual agency on you - or shuffle you off to another agent in their office for you to work with ("Designating them") -- who you may not want to work with at all.

At that point - that agent that WAS supposed to be representing you - is not supposed to tell the seller what they know about you...but at the same time, they are legally representing the seller and working in their best interest. So - as a consumer - can you see the problem here??

I hope so.

And what you - as a home buyer - aren't told - is that every other agent in that agent's office is your adversary....and that there could be overheard phone conversations, that there are shared fax machines and file cabinets, and that your agent may have biases towards showing more in-house listings or worse - their own listing -- because perhaps they get a bigger commission split if they push an "in-house" listing on you. Agents don't disclose these 'issues" to you.

When you understand that this can happen with a traditional agent - and that you get better representation from an Exclusive Buyer Agent for no extra cost (everything is built into the transaction) - using an Exclusive Buyer Agent when you are buying becomes a "no brainer."

Unfortunately - as a home buyer - you aren't told upfront what an Exclusive Right to Represent Agreement really means. And worse yet - most buyers in Illinois sign no agreement at all. This means that agents have carte blanche ability to deceive you. Across the US (and in Illinois) there is less than a 12% disclosure rate.

If you have no contract with an agent - they are supposed to disclose that they might suddenly not be representing you at one point -- upon first contact with you (or if you sign an Exclusive Right to Represent agreement with them - within that agreement) but since most buyers don't have a contract with an agent in Illinois - most of the agents are disclosing this fact way too late -- contract signing (which isn't legal).

Consumers deserve better...